Valeant Said to Plan Raising Allergan Bid Near December VoteDavid Welch and Beth Jinks
Valeant Pharmaceuticals International Inc. plans to raise its takeover offer for Allergan Inc. ahead of a December shareholder meeting where some of the target’s directors face removal, two people with knowledge of the matter said.
Valeant, which made the hostile bid along with activist investor Bill Ackman’s Pershing Square Capital Management LP, could boost the offer sooner than December if a rival bidder for Allergan emerges, one of the people said, asking not to be identified discussing private information. The company also may raise the bid before Oct. 30, which is the deadline for anyone to acquire Allergan shares and still be able to vote at the December meeting, another person said.
The increase could be about $15 a share, the people said, adding that no final decision has been made on the amount. The bidders also haven’t decided yet how the increase will be divided between cash and Valeant’s shares, the people said.
It would be the third time Valeant and Pershing Square will have raised their offer for Allergan, after first approaching the company in April. The current offer -- a mix of cash and stock -- values Allergan at about $176 a share, based on Valeant’s closing share price yesterday. Allergan rose 1.1 percent to $188.27 as of 11:20 a.m. in New York today, while Valeant fell 0.6 percent to $124.43.
Allergan, which has described Valeant’s previous offers as “grossly inadequate,” has refused to meet with Valeant while seeking to fend of the approach by striking a deal of its own. Allergan has sought to acquire Salix Pharmaceuticals Ltd. in recent months, and also has been approached about a possible sale to Actavis Plc, people with knowledge of the matter said. That strategy has drawn public criticism from other key shareholders.
At the Dec. 18 meeting, Allergan shareholders will have the opportunity to replace most members of the drugmaker’s board with people who might be more open to a sale to Valeant.
The decision to raise the offer before the meeting is a change of tack. Valeant and Pershing Square didn’t plan on increasing the offer until Allergan engaged in deal talks, or following the vote, people familiar with the situation said in August.
The two sides have waged an escalating legal and public-relations battle, with Allergan criticizing Valeant’s strategy and Valeant arguing that Allergan is poorly managed.
“We have said many times if their board wants to sit down and negotiate we would be happy to do so,” Chief Executive Officer Mike Pearson said in a July 21 Bloomberg Television interview. “We’re quite confident that once this gets to a shareholder vote, the shareholders are going to vote for the deal. If shareholders choose not to, we will respect that and go away.”
Irvine, California-based Allergan’s pursuit of an alternative deal to thwart Valeant prompted rare public scolding from key shareholders including T. Rowe Price Group Inc., Pentwater Capital Management LP and Jackson Square Partners. The fund managers each issued statements voicing concern about Allergan chasing other deals before its shareholders get to vote in December on potentially ousting most of the company’s board.
Last month, Valeant said ValueAct Capital Management LP CEO Jeffrey Ubben would join its board as of Oct. 1, underlining the money manager’s support for the drugmaker in its hostile bid for Allergan. ValueAct is Valeant’s second-biggest shareholder and expects to increase its stake, Ubben said in the Sept. 25 statement.
Representatives for Allergan, Valeant and Pershing Square declined to comment. The potential increase was reported previously by the Wall Street Journal.